New factory output index faces delay as DIPP drags its feet over data

Written by Rituparna Bhuyan | Sunny Verma | New Delhi | Updated: Oct 18 2009, 05:23am hrs
The new-look Index of Industrial Production (IIP), which would take a better snapshot of Indias factory output, is being delayed as the department of industrial policy and promotion (DIPP) is yet to give its share of data to the Central Statistical Organisation (CSO)the nodal agency for compiling the crucial economic index.

We are still waiting for the department of industrial policy and promotion to give us the data on manufacturing. From the other areas, we have, more or less, got data. Only manufacturing data is pending. So, within two months of DIPP giving us the data, the new index on IIP will be ready, Indias chief statistician and secretary, ministry of statistics and programme implementation, Pronab Sen told FE.

IIP had expanded 10.4% in August, the most in 22 months, pointing towards recovery in the Indian economy. In the present series, DIPP provides data for 209 products of the over 540 items captured by the index. Manufacturing comprises 80% of the IIP, while the rest is accounted for by electricity and mining sectors.

CSO compiles the data and releases the IIP every month. According to government officials familiar with the matter, the delay in getting manufacturing data is because of difficulty being faced in securing the old production details of companies, which is required before the new series is rolled out.

The present IIP, which was last revamped in 1993, is often criticised for capturing production data of outdated items like razor blades, typewriters and tape recorders output of which have declined considerably in the past one decade. Government functionaries and economists in the past have criticised the IIP data, maintaining that the index does not give a realistic picture of the Indian industry.

When IIP had grown provisionally by 1.3% in August, 2008, the then finance minister P Chidambaram had said: The IIP numbers are not very satisfactory and at the same time they are not very reliable. I have conveyed my concerns a couple of months ago to the ministry of industry, I have conveyed them todayIt does not sound right at all. IIP numbers have to be looked into carefully.

The new series is likely to see a change in weightage of the sectors and inclusion of newer items like Flat screen televisions and cellular phones, the boom in whose production isnt captured at all in IIPs current form. The new series will have 2004-05 as its base year.

The industry department also acknowledges that the present IIP series is outdated. It has already signed an memorandum of understanding with the Centre for Monitoring of Indian Economy for collection of data for the new series. The renewed effort of the DIPP utilising the services of CMIE could facilitate the release of the new IIP series at an early date, said a DIPP release in November, 2008. CMIE used to collect industrial production data on behalf of DIPP between 2002 and 2007.